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Stephenson Fournier
Houston, Texas

There are many perks to being your own boss. You set the hours, expectations and goals — but you also must manage the paperwork, files and tax obligations. For some, this is another perk. The need to organize paperwork may feel bring a sense of joy akin to completing a difficult puzzle. For others, the paperwork may seem more of a required burden. Regardless of which description you can relate to, business owners must get the job done.

The first step towards mastering any task is knowing the basics. One particularly difficult aspect of business ownership involves navigating tax obligations. The IRS generally requires tax payments throughout the year. The business can meet this obligation in one of two ways. Either the IRS can receive payment through regular withholdings or through quarterly estimated taxes.

If you are wondering whether your business should pay an estimated tax, you likely have the following questions:

  • Who owes the IRS a quarterly payment? Businesses that are formed as a sole proprietorship, partnership and S corporation may owe the IRS estimated tax payments.
  • How much should business owners pay the IRS? Business owners can use their income, deductions and credits from the prior year to calculate an estimated quarterly payment.
  • What happens if business owners fail to make quarterly payments? The IRS can charge businesses that fail to make quarterly payments penalties in addition to their owed tax.
  • When are quarterly payments due? The IRS requires payment for the first period on April 15, the second on June 17, the third September 16 and the fourth and final quarterly payment is due Jan 15 of 2020.